The US dollar tumbled and US equities have spiked higher in reaction to remarks by Federal Reserve Chairman Jerome Powell.

Powell while addressing the Economic Club of New York noted interest rates although still low by historical standards, are currently “just below the broad range of estimates of the level that would be neutral for the economy." The comments are starkly different in comparison to the October Fed minutes when interest rates were described as being “a long way from neutral.” Market reaction to the comments has been both swift and severe with the dollar index currently down 0.75% and the Dow up 2.0%.

Powell also described the economy as being close to achieving both of the Fed's objectives of promoting maximum employment and price stability and that rates are not on a "preset" path with the central bank paying close attention to incoming data.

Overnight the bank of England warned that a "disorderly Brexit" could shrink the UK economy by 8% and that the GBP could fall by 25%. The central bank was quick to stress that these are scenarios not forecasts and represent a worst-case scenario.

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